Qantas in October reported domestic yields, a proxy for ticket prices, had fallen by an average of 2.9 per cent in the quarter ended Sept 30.

"The impression in the market is it got better in (the December-ending quarter) but I think these Virgin stats don't support that," Mr Spence said.

"It is not Virgin and Qantas smashing each other by adding capacity. This is the demand side."

Wage growth in Australia was at its slowest pace in two decades after the end of a resources boom, and there has been an increasing shift to part-time work, weakening demand for corporate travel.

Virgin said its domestic capacity rose in the quarter ended Dec 31, even after cutting the number of flights by 5 per cent as it removed E190 aircraft from its fleet. That meant some flights had been switched to larger Boeing 737 aircraft.

The airline did not comment on the performance of its international division.